Our experiments on the regulation of monocyte collagenase production by recombinant interferon-gamma (rIFN-gamma) have demonstrated that rIFN-gamma inhibited collagenase synthesis as a result of its ability to block PGE2 production. The mechanisms of rIFN-gamma inhibition of PGE2 synthesis is due to a reduction in phospholipase A2 (PLA2) activity based on: 1) the ability of rIFN- gamma to inhibit, as assessed by HPLC, the release of arachidonic acid metabolites and 2) measurement of the PLA2 in the membranes of monocytes demonstrated that rIFN-gamma significantly reduced the membrane associated PLA2 activity. In our studies on human immunodeficiency virus type 1 (HIV-1) and the monocyte, we examined the affect of the envelope protein (gp120) on the function of these cells. Addition of purified gp120 to monocytes resulted in the induction of interleukin 1 (IL 1) and arachidonic acid metabolites from the cyclooxygenase and lipoxygenase pathways. Cytofluorometric analysis revealed that binding of OKT4a to the CD4 on monocytes was blocked by gp120, whereas OKT4 was unaffected. These findings demonstrate that gp120 is directly involved in the transduction of a signal, possibly through the OKT4a epitope on the CD4 receptor. Further evidence for CD4 mediated signal transduction was obtained with the use of monoclonals OKT4 which induced PGE2 and IL 1 production. Additionally, gp120 caused a decrease in FMLP and C5a receptors on monocytes which impaired their respond to a chemotactic signal. In contrast, IL 2 receptors on monocytes are increased by gp120. Similar changes are observed after the initial exposure of monocytes to the Ba-L strain of HIV- 1 suggesting that gp120 on the intact virion as well as soluble gp120 can dramatically influence monocyte function.